DaveW's Deals & Such

[DaveW]

I am currently adding value to a block of shops I recently bought. Tidying up the leases, increasing the rent, and cosmetic work on the property.

The interesting bit that might be worth writing about is if I add in a new shop to the existing block (would be subject to council consent). But its best not to be greedy, the yield can be lifted from 9% to 12% without doing the new shop.


Perry feel free if you think any of this is worthy of its own thread (I'm not sure how to create one).

[Bluekiwi]

I would love a DaveW Property Developers thread.
Like a NZ vesion of Homes Under the Hammer or Who want to be a Property Developer.
These stories gives us great experience (Vicarious) and learning from what you guys do and overcome, the good the bad the ugly.

And since I am just working on a 220k float myself to get started in this sort of thing, its invaluable.

[Davo36]

DaveW, please start your own thread (Perry can you tell him how to do this please?), I'd love to hear about these deals. Like how you find them, how you manage to resell them at a profit and so on. I'm doing all sorts of work and making nada right now so I'd love to hear some success stories.

[freezinhot]

Me too, be good to hear some more success stories.

I know quite a few indians/asians who own blocks of shops in the residential areas of Mangere and some of them are doing really well by running the corner dairy and leasing the other 2 or 3 buildings out.

I wouldnt mind getting into this sometime down the track as you can get a steady flow of tenants from these small blocks as long as the business owners run them properly, on the other hand there is some real run down ones in the part of town I work in.

FH

[DaveW]

Happy to do a Q&A style thread. KiwiBlue.. thats a good working capital. Davo, its the sour deals the you learn from the most.. 7 successfull deals out of a total of 10 is doing good!

[donna]

Thread Stuck - so easy to find

Hi DaveW,

Good one - I have stuck the thread for you - and I am looking forward to reading more.

Cheers,
Donna

[Davo36]

OK, Dave, I'll start the questions rolling:

1) How long have you been buying and selling real estate:
2) Do you normally trade or do you buy and hold? Or both?
3) Do you focus on one area of the country (I assume you're in Auckland) i.e. a few suburbs or do you look all over.

[Bluekiwi]

Okay Dave with a 220k float what sort of deal do you think would be good for me to start off with.

I am thinking quick cosmetic flip.

[DaveW]

Davo, I've been investing in residential since 1996 and commercial only since 2008. The rules are completely different for both and I prefer to hold on to commercial and trade residential anywhere in Auckland.

BK, you can find a good deal in any suburb so long as you buy right, what sort of profit do you want to make? can you borrow more if the property you purchase can be rented out?

[Bluekiwi]

Davo, I've been investing in residential since 1996 and commercial only since 2008. The rules are completely different for both and I prefer to hold on to commercial and trade residential anywhere in Auckland.

BK, you can find a good deal in any suburb so long as you buy right, what sort of profit do you want to make? can you borrow more if the property you purchase can be rented out?

Not so much the suburb, more the type of house.
I am tanked out with this new R/C, and why I want to trade, to assist with liquidity on my holds, and provide income source/ deposits to get more holds.

So if the property I buy cant be sold, I would then have to rent it out and put my property plans on hold till I could sell.

But I am not greedy, if I could make 5k or just break even on my first flip then I will be happy to prove to myself that I can do it.

But 20k to 40k in this 220k purchase price bracket is achieveable I think, and possibly 20k to 60k / 80k once I get in my ideal 270k to 350k range.

I am more of an expert in the South Auckland region but dont mind other areas.
Not going back west if I can help it.

[DaveW]

BK, If your LVR is less than 80% then your broker should be able to get you more funds given the new property will have a rental assessment of $300pw, say.

The more money you can get your hands on the more opportunities will be available to you. How risk averse are you? Explore other finance options as well.

[Bluekiwi]

BK, If your LVR is less than 80% then your broker should be able to get you more funds given the new property will have a rental assessment of $300pw, say.

The more money you can get your hands on the more opportunities will be available to you. How risk averse are you? Explore other finance options as well.

Na... tanking the LVR to get the funds to do flips.
Yep I know it, by limiting myself to a price bracket, the pool of potential deals becomes a puddle.

But hey got to start somewhere.
I am not risk averse, but am "High Fee" averse, what alernative finance options are there.
One I have is selling my boat to add about 30k to the pool.
And I could tap credit cards for another 10k If I wanted to.

Dave you mention 3 out of 10 deals not working so well.
Could you give us examples on the deals that didnt work too well, what was it that went wrong and what mistakes you made.

[DaveW]

Yes sell the boat, use all your credit facilities, what else? personal loans (secured by the boat? car?), borrow from your Aunt?. Don't worry about finance fees, this is a small price to pay. Getting your first deal off the ground is hard work! you've got to beg and borrow to get yourself going.

I think you will find it is the 3 bedroom family homes, nicely presented with good floor plan which are selling well. Go sit and watch the local Auction rooms to confirm this.

The mistakes I made happen when I took my eye off the ball. One place was in a flood zone and when i came to sell during the winter it was soggy as! lesson.. don't short cut due diligence. Another one I got the estimated selling price wrong because the stats provided by the agent were doctored to jack up the prices. lesson.. don't trust agents.

[DaveW]

BK, worry about the finance later. I used to make the mistake of worrying about the money.. it truely is the root of all evil! (the loving of it, that is).

Find the deal. I meant it when I said to you in another thread you need to "become a property finder like the rest of us"!

Forget the terminologies and any negative stigmas attached to them. Christ even when I say I did a deal, the word deal can conjure up negativity in people.

Forget about all that nonsense and go find what you think is a good deal and report back here with your finding. You don't need to give addresses.

You might be thinking now that if I help too many people I'm going to lose out on deals for myself. Thats not true.

[freezinhot]

Davo, I've been investing in residential since 1996 and commercial only since 2008. The rules are completely different for both and I prefer to hold on to commercial and trade residential anywhere in Auckland.

Hi Dave,

Why are you trading now on residential and not looking to hold, would it not be the most opportune time now to hold on residential or have you found a strategy that allows you to move stock even in these times.

FH